The code of conduct being developed to manage relationships between retailers and suppliers is nearing completion, says the Australian Food and Grocery Council (AFGC).
According to the ABC, the AFGC has spent months developing a dispute resolution mechanism with the supermarket duopoly – Coles and Woolworths.
The next step is to host a roundtable with a number of industry stakeholders such as the National Farmers Federation, which earlier this year pulled out of negotiations, arguing the code should be mandatory, not voluntary.
The AFGC hopes to hold the roundtable in the next few weeks.
The code is centred on the principles of codifying contractual arrangements between suppliers and retailers, ensuring that efficiency in the supply chain is achieved, and that the supply chain is not overregulated.
CEO of the AFGC, Gary Dawson, believes that a voluntary code would be just as effective as a mandatory one in ensuring the participation of the supermarket giants, especially considering failure to sign up could result in poor supplier relationships.
“It would be very difficult for suppliers given how competitive the market is. An important element of the code is about ensuring efficient retailer/supplier relationships,” Dawson told Food Magazine.
“To Woolworths’ and Coles’ credit, they have taken that on board and we are working through those issues.”
Dawson said that the AFGC is working with the retailers to develop an effective code that provides more contractual certainty, encourages investment in innovation, provides for appropriate sharing of risk and an effective dispute resolution mechanism – all without adding unnecessary compliance costs on suppliers.
Earlier this year, the ACCC announced it would be investigating the supermarket duopoly amid claims Coles and Woolworths bully their suppliers to force prices down.
The investigation is considering claims that the supermarkets impose penalties on suppliers that aren't part of the terms of trade, favour homebrand products, threaten to remove products from the shelves if extra payments or penalties aren't paid and fail to pay prices agreed with suppliers.
A key element of the code of conduct will be an examination of the shelf space supermarkets allocate to private label products.